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Oct 8, 2018

European Markets at Close Report: European markets tumble at the close as Italy, China woes weigh; FTSE MIB falls 2.3% I CNBC

European markets finished Monday's session deep
down in the red, as investor confidence took a knock from weak trading
seen in markets overseas.
The pan-European Stoxx 600 tumbled 1.14 percent by the provisional close, with all sectors in the region failing to post gains by the end of trade.
On the bourses front, the
FTSE 100 slipped 1.08 percent, while the French CAC 40 fell 1.14
percent and the German DAX dropped 1.4 percent. Markets in peripheral
Europe closed in the red.

Europe's banking index was among the worst sectoral
performers, down more than 1 percent amid renewed fears over Italy's
budget plans. The FTSE MIB index slipped over 2 percent during afternoon
deals, with government bond yields hitting fresh highs during trade.
The EU reiterated concerns
over Italy's budget plans over the weekend, saying it is worried Rome's
plans breach what it asked the country to do earlier this summer. In
response, Italy said it would "not retreat" from its current spending
plans.
The news appeared to ratchet up the pressure on the country's already fragile banking sector, with Unicredit, Ubi Banca and Banco BPM all trading down more than 3.5 percent each on Monday afternoon.
Looking at individual stocks, Norway's Norsk Hydro
surged to the top of the European benchmark after the aluminum firm got
a key permit to help it restart its Alunorte refinery at half-capacity.
Shares of the Oslo-listed stock rose almost 4 percent on the news.
Tele2 jumped over 2
percent after the company confirmed that the European Commission had
approved its merger with Com Hem Holding.

Trade tensions

Looking at markets overseas, shares in Asia dipped broadly after the People's Bank of China
said it would cut the amount of cash that banks are required to hold as
reserves. The move comes amid concerns about the economic impact of
trade tensions and import tariffs between China and the U.S.
Chinese stocks in
particular fell sharply after mainland markets opened for the first time
in a week after the country celebrated Golden Week. Traders also
digested purchasing managers' index (PMI) data out of China Monday,
which showed a fast-growing services sector but rising cost pressures
and lower employment.
Investors will be keeping an eye on U.S. markets on Monday amid fears of rising interest rates. Comments by U.S. Federal Reserve Chair Jerome Powell last week about the U.S. central bank's interest rate hiking path sent Treasury yields to multi-year highs.
And key nonfarm payrolls
data showed a worse-than-expected increase in jobs — but a fall in the
unemployment rate to 3.7 percent, the lowest level in almost five
decades. The economic data, alongside Powell's comments, sent shares stateside lower
Friday, with the S&P 500 posting its worst weekly performance since
September 7. U.S. bond markets are closed on Monday, in light of
Columbus Day; which provided some respite to Wall Street, as stocks
traded mixed in the early part of the session.

Are we entering the beginning of a bear market for bonds?

Total Votes:
Not a Scientific Survey. Results may not total 100% due to rounding.

On the political front, U.K. Prime Minister Theresa May got a boost Sunday after Japanese Prime Minister Shinzo Abe told the Financial Times
that he would welcome Britain into the Trans-Pacific Partnership
agreement "with open arms" after Brexit. And EU officials have become
growingly optimistic about the possibility of a Brexit deal being
reached, with European Commission President Jean-Claude Juncker saying
an agreement could be struck by November.
However, surveys released
by Deloitte and the British Chambers of Commerce on Monday showed that
uncertainty is still weighing on British businesses, putting exports,
recruitment and investments under pressure.

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